report from the board of directors and the president of bancÓldex 2011

ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC

REPORT FROM THE BOARD

OF DIRECTORS AND THE

PRESIDENT TO THE GENERAL

SHAREHOLDERS MEETING

2011

INTRODUCTION

During 2011, the country’s performance exceeded the expectations of analysts, in contrast to the

behavior of the economies of Europe and the United States, wherein a general deterioration of the

financial outlook was observed. Colombian economy showed better dynamism and entered a

path of growth which became consolidated during the last quarter of the year. In addition, an

excellent business environment was perceived, accompanied by a good behavior of foreign

investment and exports, as well as a lower unemployment level. On the other hand, the year was

characterized by a significant credit growth to accompany the good dynamism of the productive

apparatus.

For Bancoldex, the favorable business environment was reflected in an excellent annual credit

behavior. Particularly, the last month of the year showed the greatest historical levels of

disbursements both in local and foreign currencies. This optimistic context allowed expanding the

deepening of attention to Small and Medium Enterprises (SMEs) throughout the year,

strengthening regional presence. Likewise, the Bank focused in offering products destined for

industrial modernization and reconversion, extending and strengthening the financial resources

distribution network, supporting the purchases of Colombian goods and services. It also

continued driving the entrepreneurial strengthening with training programs in Management and

continued the private equity funds investment program. Finally, aware of its function as

Development Bank, it supported sectors with specific problems such as the seasonal rains with

special conditions.

1This good performance was confirmed with the results obtained in an evaluation with an impact

analysis of Bancoldex credit activity on performance of enterprises, emphasizing the effect of

credit lines modernization. This impact assessment found a positive correlation between the use

of medium and long term of Bancoldex credit and growth of companies during the years following

the credit disbursement. On the other hand, the companies who received Bancoldex credits

reflected a production increase of 24%, increases of employment levels of 11%, investment 70%,

and a productivity 10% compared to those companies that did not receive resources from

Bancóldex. In addition, a positive effect of the short term lines was outstanding within the export

sector, which increased its sales levels abroad and broadened the export supply.

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENTTO THE GENERAL SHAREHOLDERS MEETING 2011

INTRODUCTION

01

INTRODUCTION

1 | Impact evaluation carried out for Bancoldex by the IDB under the coordination of Mr. Fernando De Olloqui in Alliance with the economists Ms

Marcela Eslava and Marcela Meléndez. The study covered the period between 2000 and 2009.

On the other hand, during 2011 a new era began for Bancoldex, strengthening its function as

Development Bank. Its commitment with the National Development Plan “Prosperity for all”

represents new challenges to attend and promote entrepreneurial development in the country. In

such sense, the Government strategy to design and implement an Integral Development Banking

model, within the framework of sustainable growth and competitiveness was established as one of

the strategic guidelines to support the growth locomotives and employment in the country. In

accordance with the foregoing guideline, Bancoldex will migrate to this model, incorporating

development agency functions and offering services supplementary to credit.

To achieve the foregoing, the Bank was in charge of carrying out the actions necessary to

implement the Development and Innovation Unit (DIU), as well as establishing the timetables for

the activities and requirements of resource management both for the Modernization and

Innovation Fund for Micro, Small and Medium enterprises, such as the Productive Transformation

Program (PTP).

his process of structuring, assembly and operation of the Development and Innovation Unit was

successfully completed in the month of October. For the Bank, the foregoing implied an

adjustment and learning process throughout the year which concentrated on supporting the

implementation of priority strategic projects relating to the structuring of new roles to be

assumed. On its part, the reallocation of resources, the strengthening of processes and the

construction of an adequate infrastructure allowed a year ending with satisfactory management

results.

With regards to the Investment Program “Banca de las Oportunidades”, the activity focused

throughout the year on strengthening the instruments to increase population coverage and

banking services accessibility. In this sense, the consolidation of the increase in coverage

extension in 183 municipalities, the opening of 22 Non Banking Correspondents (NBC) in marginal

neighborhoods, the design of financial education programs, the implementation of mobile

banking for payment of conditioned subsidies, the technical assistance to implement community

banking methodologies and finally, the fulfillment of the credit goal for micro-entrepreneurs.

The organizational effectiveness, as an element necessary for attaining the mission’s results,

continued with its consolidation process grounded on strengthening its human capital, versatile

and robust technological structures and a functional architecture oriented towards quality and

excellence.

Finally, aware of the responsibility and the new challenges for Bancoldex of strengthening the

entity as an Integral Development Banking Model, the mission’s and vision’s strategic guidelines

02

were modified, in order to include the new elements in force to set the Framework of the

management as from 2012.

Following, we submit the complete report of the Bank’s performance during 2011, including the

corresponding regulating mandates, aspects relating to risk management, quality management,

internal control system, legal situation, corporate government, transactions with parties related to

capital, subordinates, intellectual property and copyrights, among others.

INTRODUCTION

03


BEHAVIOR OFTHE ECONOMYDURING 2011

During 2011 the world economy showed different results that maintained uncertainty regarding

the soundness and speed of the 2008 and 2009 financial crisis recovery. Dynamism slower than

expected was observed in the United States, situation that led to a reduction of the GDP growth 2

forecast for 2011 , whose current estimate is 1.5%. The labor market slowly improved and the 3

average unemployment rate decreases compared to that recorded in 2010 ; nevertheless, it

maintained itself at high levels. The real estate market activity continued to be Peak and the prices

are still pending recovery. On its part, Europe showed a general deterioration of the economic 4outlook, which was driven by the fiscal crises of countries such as Greece , Portugal and Ireland,

5among others , which led to questioning the feasibility of the Euro and of the European Union

itself. The boom of emerging markets such as Brazil, China, India and Russia helped to mitigate the

negative impact of the economic context of advanced economies. Notwithstanding, during 2011 a 6

slight downturn was observed in the growth of such countries .

The foregoing, added to the loss of investors confidence facing the search for fast and efficacious

solutions by the political authorities of the U.S. and Europe, led to an increase of volatility in the

financial markets and a preference for refuge assets. On its part, monetary authorities

implemented measures to provide sufficient liquidity to the markets and avoid contractions in the 7

credit supply to the economy .

On its part, during 2011, Colombian economy showed a better dynamism and expects a GDP

growth of nearly 5.5%. The growth was driven by the behavior of internal demand through greater

investment, as well as through an increase of consumption of households. Between January and

September 2011, the household consumption recorded an annual variation of 6.7%, while

BEHAVIOR OF THE

ECONOMY DURING 2011

05

2 | In the World Economic Outlook of April 2011m the International Monetary Fund (IMF) expected a GDP growth of 2,8%, while the forecast of the

report of September 2011 decreased to 1.5%.

3 | Between January and December 2011 the unemployment rate was 8.9% compared to 9.6% for the same period in 2010.

4 | Greece was the country showing the greatest fiscal deterioration in the Euro Zone, reason for which in May the European Union and the IMF had

to provide a second bail out package of EUR 78.000 million.

5 | Also. A fiscal deterioration stood out of countries such as Italy and Spain, situation that was reflected in a significant deterioration of their

sovereign bonds.

6 | With the exemption of Russia, the countries registered growth rates lower than those observed during 2010.

7 | In August 2011, The Federal Reserve of the U.S. announced it would maintain the overnight interest rate unaltered in 0.25% until mid 2013. On its

part the European Central Bank reduced the overnight interest rate from 1.5% to 1.0%.


06

investment (gross capital formation) registered 18.7%. On the side of supply, GDP growth was led

by the exploitation of mines and quarries, sector that has shown a good dynamism during past

years and has consolidated as one of the main receptors of foreign investment. Between January

and September, this sector accumulated growth of 12.6%, followed by sectors relating to services,

such as transport, storage and communications and the trade sector, with variations of 7.2% and

6.6% respectively. Finally, the economic results were reflected by the evolution of the labor market;

in November the unemployment rate reached 9.2%, compared to 10.8% registered during the

same period of 2010.

Regarding foreign trade between January and October a significant growth was observed in 8

exports (42.2%) , due to the exceptional dynamics of sales of traditional products (56.8%). On its

part, non traditional exports increased in 17.6%, although their behavior was limited by the slow

recovery of the commercial partners such as the U.S. and the European Union and by the

remarkable reduction of trade with Venezuela. With respect to imports, its behavior was favored

by internal demand and between January and October the growth reached 37.1%. The foregoing

led to a generation of surplus in the balance of trade, which reached USD 3,401 million in October,

as well as a strengthening of the exchange terms.

As of the closing of 2011, inflation reached 3.73%, within the range goal fixed by the Central Bank

(Banco de la Republica) (2%-4%). The recovery of the economy as well as the impact of the

seasonal rains over food prices generated pressures to increase the consumer price index

throughout the year. The foregoing led the Central Bank to initiate a monetary contraction policy

through the increase of the reference interest rate. During the year, the Central Bank increased the

repo rate seven times from 3.0% to 4,75%.

A strengthening of the Colombian Peso (COP) was observed throughout the year and the average

exchange rate was COP 1,848,17, namely COP 49.72 less than that registered in 2010 (COP

1,898.89). The foregoing is explained due to the fast recovery of some of the emerging economies

of Asia and Latin America, which was reflected in larger inflows of direct foreign investment capital

(DFI) and the consequent appreciation of currencies. In the Colombian case, between January and

September, the DFI registered an increase of 88.7% compared to 2010 and reached USD 10,821 9

million . Nevertheless, due to the uncertainty of the fiscal situation of Europe, as from September

risk aversion in the financial markets increased generating preferences for refuge assets and

strengthening of the USD. In accordance with the foregoing, the Exchange Rate Representative of

8 | As of October closing, total exports reached USD 46,297 million.

9 | Preliminary data of the Balance of Payments. Source: Central Bank (Banco de la Republica).

07

BEHAVIOR OF THE ECONOMY DURING 2011

the Market (ERM) at the year closing was COP 1,942.07, which is equivalent to a depreciation of

1.5%.

With respect to fiscal matters, a better dynamism of the economy had a positive impact on tax

collection and the estimate growth for tax income for 2011 of the National Central Government 10

(NCG) is greater than 25% . The foregoing led to a reduction of the NCG deficit from 3.8% of the

GDP on 2010 to 3.2% of the GDP in 2011. In accordance with the foregoing, the deficit of the Non

Financial Public Sector (NFPS) and the Consolidated Public Sector (CPS) shall be 2.8% and 2.9% of

the GDP respectively. It is worth mentioning that in June the Senate of the Republic approved the 11

bill establishing the implementation of the Fiscal Rule , with which it shall seek a greater fiscal

discipline and assuring a greater sustainability of public debt. The good growth perspectives as

well as the greater soundness of public finances were determining factors for the rating agencies

Moody’s, Standard and Poor’s and Fitch Ratings to grant the investment grade to the country

during the first semester of 2011 for long term sovereign debt.

The economic growth rhythm is expected to be maintained during 2012, thanks to a positive

dynamism of a significant portion of the economic sectors, investment and foreign trade.

Nevertheless, due to economic activity performance, we could expect potential inflation increases

as well as of interest rates. Notwithstanding, there are risks within the international environment,

such as a growth slowdown in the U.S. and deterioration of the European crisis, that could affect

the dynamics of the economic activity, especially that relating to foreign trade.

10 | Preliminary data of the Ministry of Finance and Public Credit. December 22, 2011.

11 | Mechanism that allows strengthening the fiscal discipline by establishing single goals over the balance of the Central Government, in such a

manner that its expenses are in accordance with its long term structural income. Compliance of such single commitments shall allow the

strengthening of public finance in the medium term and guaranteeing the sustainability of the public debt and the macroeconomic stability of the

country.


FINANCIAL SECTOR

Despite the fact that 2011 was characterized by an environment of high uncertainty of the

international financial markets, the Colombian financial system showed a positive behavior. The

soundness of the national banking, the low dependence on international financial markets and the

good performance of the economy allowed this result. Thus, as of November 2011, the credit

establishments accumulated COP 3.1 trillion, a figure greater than the one registered in 2010 (COP

5.4 trillion).

A positive dynamism of credit was observed throughout the year. As of November 2011 the 13

portfolio balance reached COP 213.1 trillion and showed an annual growth of 22.2% . The

consumption portfolio recorded the greatest expansion per modality, showing an annual variation 14of 25.2% followed by the commercial portfolio 21.5% . The growth of the portfolio was

accompanied by a good credit quality, product of the economic recovery and the strengthening of

the processes of placement and Collection by the financial intermediaries. In November 2011, the 15

due portfolio represented 2.8% of the total portfolio and the level of provisions was 163.2% .

Notwithstanding, the consumption portfolio recorded a slight deterioration compared to the

indicator registered during the first months of the year.

Investments recorded a growing trend and continued with a significant participation in the assets

(20%), contributing positively to profits. Among the investments, the public debt certificates had a 16participation of l 57% and recorded appraisements which contributed a 19% of the total

17income .

The capitalization level continued to be one of the strengths of the financial system entities.

Average solvency of these entities was 14.6% and exceeded in 5.6 per cent points the minimum

required. The capital plus reserves grew 27% because several entities adopted the capitalization of

a great portion of their profits obtained during 2010 as a policy.

12FINANCIAL SECTOR

09

12 | Only includes credit establishments.

13 | In 2010, for this same period of time, the growth was 16.4%

14 | The mortgage portfolio grew 12.4% as a result of the incentives established by the Government and the micro credit portfolio grew 38.4%

supported on the conversion of some entities not subject to the surveillance of the Financial Superintendence in banks.

15 | As of December 2010, the quality indicator was 2.9% and the hedging indicator was 171.2%.

In November 2011 they participated with 65%. Calculations by Bancoldex.

16 | In November 2011 they participated with 65%. Calculations by Bancoldex.

17 | Considering the most liquid reference of the market, the Public Debt Certificates (TES) with maturity in July 24, 2010, it was observed that such

certificates accumulated a drop of 56 basis points, which was reflected in a greater re-appraisement of such certificates.


10

18In general, the profitability indicators remained at adequate levels and the profits were

generated mainly by greater portfolio income, important dynamism of recovery and income due

to investments. Notwithstanding, the financial margin decreased due to the effect of greater

funding rates.

For 2012 the expectation is that credit will continue to show positive growth dynamics, although at

a lower pace than in 2011, particularly for some types of portfolio, especially consumption, since

some entities will increase the requirements for the placements. On its part, it is expected that

liquidity of the system is strengthened thanks to the application of new strict regulations on the

matter, similar to the new Basel standards. Nevertheless, that could restrict the availability of liquid

resources in the market, and eventually they could generate pressures on funding interest rates.

On the other hand, the profitability is expected to continue to be adequate, although with lower

margins due to higher financing costs, lower income for services and greater requirements of

liquid assets. Notwithstanding, the solvency levels shall continue to be adequate.

18 | In November 2011, the system recorded a ROAA of 2.6% compared to a ROAA of 2,5% in 2010.

MANAGEMENT ANDACCOMPLISHMENTS2011

2011 was a year characterized by relevant facts within the development of the Institution:

• The first refers to the role to be accomplished by the Institution within the National Development

Plan of the new government.

• The performance of the credit business as support to the growth requirements of the productive

apparatus as a set, trade sector, industry and tourism, as well as specifically what relates to

accompaniment of foreign trade.

Under these facts, following are the details of the progress and achievements in each front:

Development and Innovation Unit - iNNpulsa Colombia

The basis of Law 1450 of June 16, 2011, through which the National Development Plan 2010-2014

- “PROSPERITY FOR ALL”- was issued, established that the National Government shall support the

entrepreneurial and innovative activity of the companies through a set of modern industrial policy

instruments, integrated through the creation of the development banking. This concept shall

allow coordinating different financial and non financial existing instruments as well as the design

of new instruments taking into account the needs of entrepreneurs and businessmen.

1 | BANCOLDEX AS RESOURCE ADMINISTRATOR

12

MANAGEMENT AND ACCOMPLISHMENTS 2011

COMPREHENSIVEDEVELOPMENT

MODEL

SECONDFLOORBANK

FINANCIAL

ACTIVITY

BANK OF OPPORTUNITIES

DEVELOPMENT AND

INNOVATION UNIT

MODERNIZATION AND

INNOVATION FUND

PRODUCTIVE TRANSFORMATION

PROGRAM

SPECIAL PROGRAMSADMINISTRATOR

Additionally, the basis of Law 1450 of June 16, 2011 established that Bancoldex shall migrate to a

model of integral development banking, incorporating functions as a development agency and

offering its services and activities supplementary to credit.

In such sense, during 2011 Bancoldex assumed the

challenge of implementing the Development and

Innovation Unite, in accordance with the direction defined

by the Government in the National Development Plan,

with the objective of driving the productive sectors of the

country and achieving that more entrepreneurs engage in

high impact processes with emphasis in innovation, acting

through four (4) major strategies:

1. Innovative Dynamic Enrtepreneurship:

The objective is to support the development of an ecosystem for innovative Entrepreneurship, its

coordination as well as the strengthening of an entrepreneurial culture of the country, promote

the creation of companies with high value and technological basis, through financial and non

financial instruments such as: (a) allocation of non reimbursable investment resources for

entrepreneurial prototyping services, pre-seed and seed capital; (b) promotion of the risk capital

industry through seed capital funds and Networks of angel investors; (c) support of the Academy,

research centers and institutions for non academic accompaniment for strengthening those

activities supporting entrepreneurship.

2. Entrepreneurial Innovation and Competitiveness / Micro, Small and Medium

Enterprises (MSMEs):

The objective of the Modernization and Innovation Fund for Micro, Small and Medium Enterprises

is to strengthen this entrepreneurial segment. The Fund, operated through open counter

invitation based on the demand of non reimbursable confined resources, namely permanent

invitations up to the exhaustion of resources, shall focus such resources for the development of

projects oriented towards entrepreneurial innovation, whether during the development of new

products and/or services, development of new processes, and in association schemes such as

development of suppliers, distributors or cross linking.

On October 2011, the Fund assumed the commitments acquired by the former Fomipyme in order

to continue with the projects under way. The challenge for 2012 is to implement an administrative

and operation model designed for the new Fund, which shall concentrate in supporting

13

MANAGEMENT AND ACCOMPLISHMENTS 2011REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENTTO THE GENERAL SHAREHOLDERS MEETING 2011

14

entrepreneurial innovation and modernization in formalized MSMEs. Likewise, a challenge is to

assume the management of resources of contributors of the national and international orders,

through the creation and operation of special programs for MSMEs.

3. Innovation in major companies and promotion of R & D:

As part of innovation cultural strengthening, the work with major companies focuses on

promoting in-house systemic innovation programs, which allow a continuous improvement and

positioning vis a vis its similar companies as a competitive advantage. The creation of R & D centers

would be a result of this work, to develop all its activities in-house and to attract research by

international companies, focusing on innovation in national business.

4. Innovation Program for Innovation and Regional Strengthening:

A joint effort with the regions through Regional Competitiveness Commissions seeks to generate

local capacities for identifying initiatives and proposals of projects, through regional clusters and

their coordination with public and private resources to implement them. Competitiveness

strategic projects shall be coordinated through a management and structuring program to

promote innovation and productive transformation with a regional emphasis, including the needs

of resources and sources of public and private funding, along with Bancoldex rediscount lines as an

applicable instrument, to implement projects as well as pilot projects, establishing a Suppliers

Development Program. It initiates with the Hydrocarbons sector and high-end mining through

the definition of strategic projects with each of the companies allowing a productivity increase and

technical capacity within the sector.

Productive Transformation Program

Article 50 of the National Development Plan 2010-2014, established that the Productive

Transformation Program, originally created by the Ministry of

Commerce, Industry and Tourism in 2008, should be administered by

Bancoldex.

Due to the foregoing, in September 2011, Bancoldex and the Ministry

of Commerce, Industry and Tourism, entered into the agreement 187 of

2011, through which the institutional framework is created to manage

the Program.

The strategic objective of the Productive Transformation Program is to

15

19promote productivity and competitiveness of sectors with a high export potential, acting as an

instrument for making the most of free trade agreements.

Progress and achievements of the Program during 2011

Identification and engagement of 4 new sectors (reaching a total of 16 sectors).

Exports of those sectors participating in the PTP reached over USD 5.9 billion, exceeding the

results expected for this period.

Incorporation of the Program to Bancoldex, increasing its Budget from COP 9.74 billion in

2011 to COP 24 billion in 2012.

Positioning and consolidation of the PTP with other government entities and international

organizations, promoting projects such as:

Orientation of COP 15 billion pesos deriving from the SENA and Colciencias for innovation

and technological development in sectors of the Program.

Obtaining international cooperation resources for programs and projects seeking to

increase competitiveness of the sectors belonging to the Program. As an example,

Technical Cooperation among the sectors and EU, CBI, SECO, JICA, KOICA and GEF-CAF.

Broadening and strengthening of the work team to guarantee an efficient response and a

greater impact to the needs of the sectors.

Focus of the work of the PTP sectors through the identification of 4 flagship projects and 8

priority initiatives.

International acknowledgement to the Program for its leadership in implementing innovating

policies in productive transformation, by McKinsey & Co and Oxford University in England.

The first Major National Conference of Productive transformation – under the framework of

the Agreement for Prosperity No. 48- was carried out in the city of Medellin, including:

The attendance of more than 600 entrepreneurs of first level and 200 public officers.

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19 | The PTP sectors are son: metallurgical and y iron and steel, vegetables and fruits, Dairy and tourism of nature (identified in 2011); and industry of

automotive parts and vehicles,; electric power, related goods and services; publishing and graphical communication industry; leather, textiles,

clothing, fashion and design; health tourism; cosmetics and cleaning articles; business processes outsourcing (BPO); software & IT; shrimp farming;

bovine meat, palm, oils, vegetable fats and bio-fuels; chocolate making, confectionery and their raw materials.

MANAGEMENT AND ACCOMPLISHMENTS 2011REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENTTO THE GENERAL SHAREHOLDERS MEETING 2011

16

¤ -Workshop were developed for each sector in which the public and private sectors

reached agreements and work initiatives with due dates and responsible persons.

Investment Program “Banca de las oportunidades”

EThe investment program of “Banca de las Oportunidades” (IPBO) was created by the Decree 3078

of September the 8th of 2006, incorporated in Decree 2555 of 2010. This initiative emerged as a

long term policy from the National Government and is oriented

towards promoting access to financial services for the population, with

emphasis in low income families, aiming to promote the country’s

development and looking for social equity. By mandate of the Ministry

of Finance and Public Credit, the program is administered by the

Colombian Foreign Trade Bank S.A. -Bancoldex.

The Program seeks to improve the financial inclusion level and to

expand the coverage to all municipalities, with products and financial

services adequate for all segments of Colombia’s population.

The Banca de las Oportunidades network is comprised by Banks, Credit Unions with financial

activity, Microcredit NGO entities, Financing Companies, and existing Insurance Companies which

are used as mechanisms to attend and expand the program.

During 2011 the development of the programs for extending the coverage of Non Banking

Correspondents (NBC) continued reaching 183 additional municipalities that did not have

financial presence, leaving 10 municipalities without presence.

Additionally, the co-financing programs continued to increase the coverage with the participation

of 11 NGOs, 13 Credit Unions and 2 Financing Companies, consolidating presence in 104

municipalities. It is worthwhile mentioning that after the programs are completed, the entities

maintain the contact points open in such municipalities and furthermore they reached

neighboring municipalities with financial presence.

During the development of agreements entered into for co-financing the opening and promotion

of Non Banking Correspondents (NBC) in marginal neighborhoods, during 2011 22 NBC were

opened in zones of socio-economic strata 1 and 2 in marginal neighborhoods of the cities of

Barranquilla, Bogota, Medellin, Bucaramanga, Cartagena and Cali, providing coverage to all the

zones of these cities that lacked financial presence.

With the purpose of promoting the savings culture in families with low resources, through the

17

agreement with Carvajal Tecnología, it was possible to train 28,000 women belonging to Familias

en Acción.

Since 2008 the Banca de las Oportunidades Program has promoted the implementation of the

mobile banking as a channel and means to provide access to banking. During 2011 different

schemas of Mobile banking were launched as a massive solution for financial inclusion for the

poorest population, to allow carrying out transactions, in some cases free of charge. The Banca de

las Oportunidades Program with Social Action (currently the Administrative Department for Social

Prosperity) carried out a pilot project to perform payment of conditioned subsidies of beneficiaries

of Familias en Acción through Mobile banking. Such program counted with the participation of

Davivienda, AvVillas, Banco Agrario and Banco Popular, whose mobile solutions remained in the

market to attend the different segments of the country’s population in a massive manner.

In an alliance with the Confederation of Credit Unions of Colombia – Confecoop, Banca de las

Oportunidades developed a Financial Education program for Credit Unions with financial activity

in order to train trainers. Through three workshops in the cities of Bogota, Medellin and

Bucaramanga, the methodology was conveyed to 52 Credit Unions in Colombia, who shall

replicate the Financial Education.

Through the development of a consultancy program to carry out a pilot project to issue and place

a credit card for micro-entrepreneur women, in November 2011 the Banco Agrario launched such

card.

Based on the positive results of the pilot Savings Groups and Local Credit and with the purpose of

continue with the implementation of this methodology reaching poor population, during 2011

the expansion phase of the methodology reaching the poor population was initiated conforming

600 groups with 9,600 beneficiaries focused in the population of United Networks. In order to

develop such project, the financing was provided by Acción Social and DNP. In addition, a

donation was made of € 865.400 by Alliance for Financial Inclusion (AFI) and GIZ to develop a

model of adjustment to the financial system of the beneficiaries of the Savings Groups and Local

Credit and to perform an impact assessment.

Seeking to increase the supply of credit and savings products adequate for the population with

lower income, Banca de las Oportunidades through the firm AECOM INTERNATIONAL is carrying

out a Technical Assistance Program to implement the methodology Community Banking in 6

intermediary institutions, in 14 departments and 54 municipalities. As of September, 2011, 22,452

clients had been engaged through this project.

On the other hand, during 2011 Banca de las Oportunidades initiated the project with technical

REPORT FROM THE BOARD OF DIRECTORS AND THE PRESIDENTTO THE GENERAL SHAREHOLDERS MEETING 2011 MANAGEMENT AND ACCOMPLISHMENTS 2011

18

assistance for the design and implementation of savings and credit products to engage 100,000

active low income clients with micro-savings and/or micro credit products through Credit Unions.

For such end, WOCCU was hired as technical assistant, who in December 2011 had pre-selected 12

Credit Unions, through which this goal will be met.

In order to support the lower income population for mitigating risks and preventing they fall

below the line of extreme poverty while facing a casualty, the Banca de las Oportunidades

awarded the bid for the Development of a Special Product of Micro-Insurance for people

integrating Hogares de las Familias of the United Network.

To contribute to the population affected by seasonal rains, in 2001 Banca de las Oportunidades

signed an amendment to the agreement entered into with FNG to support with an automatic

guarantee 80% of the credits granted by the entities to natural persons, micro and small

enterprises affected by the seasonal rains.

In connection with the total Credits to micro entrepreneurs through the Banca de las

Oportunidades network, in 2011 more than 2 million micro credits were disbursed for over 6

trillion pesos.

As of December 2011 there are 19,927 Non Banking Correspondents (NBC), opened by 14 entities,

in 918 municipalities of Colombia. During the same period of the previous year, the number of Non

Banking Correspondents (NBC) was 9,698, opened by 11 entities, in 857 municipalities

The NBC mechanism was implemented in 2011 by: Colpatria, Finamerica and Bank WWB.

AU

G/1

0

SE

P/

10

OC

T/1

0

NO

V/1

0

DE

C/1

0

JAN

/1

1

FE

B/

11

MA

R/1

1

AP

R/1

1

MA

Y/1

1

JU

N/1

1

JU

L/

11

AU

G/1

1

SE

P/

11

OC

T/1

1

NO

V/1

1

DE

C/1

1

NUMBEROF NBCsOPENED

19,92718,595

14,942

12,569

7,6286,229

9,6989,7328,315

9,458 9,843

6,104 6,676

12,346 13,296

16,462

19,220

19

2 | BANCOLDEX AS A BANK FOR ENTREPRENEURIAL

DEVELOPMENT AND FOREIGN TRADE

Year 2011 was a record year with the greatest level of disbursements in the history of the Bank.

During this year, the Bank disbursed COP 4.2 trillion due to an exceptional demand of dollars for

USD 1.161 billion. This happened during a year in which the Bank assumed new challenges

initiating a consolidation process as agency for development and took the leadership in matters

such as environmental financing in the country.

Thus, during 2011 the Bank’s management focused on the following principles:

As a development Bank, to deepen in the financing of modernization of the productive

apparatus and the consolidation of the MSMEs entrepreneurial segment with a new element:

Consolidation of the environmental policy of the Bank generating internal control

processes and the creation of the first line 100% green, seeking to deliver resources

exclusively directed towards the control and improvement of the environmental impact of

the companies.

In its role as foreign trade promoter, to support the internationalization of the economy with

emphasis in market diversification.

Being one of the main tools of action of the National Government, to attend the conjunctural

needs present in the country during the year, such as:

The recovery process of the entrepreneurial activity in the zones affected by the seasonal

rains, along with the financial support of investments to allow the mitigation of the effects

of natural disasters in the future.

To become the liquidity support for enterprises with exports to the United States during the

months of suspensions of the ATPDEA benefits prior to the approval of the Free Trade

Agreement with that country.

Initiation of the consolidation process of the Bank as Agency for Development through the

creation of new programs or their transfer to the Bank from entities such as the Ministry of

Commerce, Industry and Tourism.

In this manner Bancoldex fulfilled the medium and long term strategic objectives, which may be

summarized as follows:

à

¤

à

à

¤

¤

à


20

à

à

à

à

à

à

Entrepreneurial modernization: COP 1.28 trillion in financing for modernizing the

productive apparatus, including disbursements for COP 635 billion through the new Line for

Entrepreneurial Modernization and COP 329 billion for the program “aProgresar” whose

objective is the productive improvement of Micro, Small and Medium Enterprises (MSMEs).

Medium and long term financing: 53% of the total disbursements were placed with larger

terms, attaining the objective proposed of term transformation, including medium term

financing in dollars for market diversification.

MSMEs approach: 40% of the total disbursements were directed to this segment.

Support to economy’s internationalization, foreign trade:

1. Financing: USD 156.58 million.

2. International Banking Operation (IBO): USD 76.3 million.

Regional coverage: the Bank maintained a strong coverage and reached 719 municipalities

attended during the year with emphasis in the zones affected by seasonal rains.

Likewise, the Bank maintained its goal of deepening its role as a multibank for development.

Thus it carried out efforts for strengthening its portfolio initiating a structuring of new

products, among which the creation of an immediate revolving credit for entrepreneurs and a

new scheme of invoices international discount stand out to drive exports of Colombian

products.

21

The steps taken by the Bank to fulfill these objectives was oriented towards the following areas:

1 | Products Consolidation

Credit Lines and Special Quotas

In 2011, Bancoldex strengthened its portfolio in several ways:

12 special new regional quotas were published, besides the extension of some of the existing

ones, in agreement with municipal and departmental entities to attend enterprises in regions

with preferential conditions and to promote credit dynamics. The foregoing allowed 2011 to

stand out as the year with the greatest dynamism in disbursements for these types of lines with

COP 210.53 billion delivered.

New lines for working capital, entrepreneurial sustainability and modernization were launched

in September to broaden the portfolio for attending entrepreneurial basic needs. The great

acceptance of these lines allowed reaching disbursements for COP 1.11 trillion in 4 months of

operation and to become one of the leading products of the Bank.

In agreement with the Ministry of Culture, the Bank published a special line directed to drive

the development of MSMEs dedicated to cultural activities, with an allocation of COP 4 billion

of which COP 268 million have been disbursed.

2 | Strengthening the Bank’s regional presence

Deepening of MSMEs attention was achieved through strategic alliances carried out with labor

guilds, chambers of commerce and universities. This allowed the coordination of disclosure

activities for the product portfolio, training, participation in fairs and advisory for its affiliates.

Furthermore, the coverage of the Program Junior Executives was extended to two new cities,

strengthening the presence of the Bank in Tunja and Cucuta, supplementing the program for

executives in Villavicencio, Pereira, Bucaramanga, Pasto, Neiva and Ibague.

3 | Provide a tool to support sectors with specific problems

During 2011, several alliances took place with the National Government and the Ministry of

Commerce, Industry and Tourism to generate packages of credit lines directed towards the

attention of circumstantial problems such as the lack of liquidity of enterprises with exports to the

United States, caused by the suspension of the ATPDEA tariffs in February. This was addressed

through supplementary lines to cover the liquidity needs of the companies, promoting

à

à

à


22

investments for industrial reconversion and the penetration of new markets. In 2011 these lines

delivered resources for USD 253 million.

Additionally, along with the Ministry of Commerce, special lines were created to support

companies located in border zones Colombia – Venezuela, lines through which resources were

delivered for COP 21.933 billion to drive the productive development in these areas.

Aware of the negative effects of the continuous rains in several regions in the country, the Bank

offered lines specifically directed to those companies affected by the seasonal rains, attending

investments for recovery, mitigation and future control of the effects of the Niña Phenomenon.

These lines disbursed resources for COP 48.762 billion during the year.

4 | Promote and encourage entrepreneurial productive

transformation through entrepreneurial modernization and

reconversion

Although the Bank focused great part of its resources for supporting sectors with liquidity

problems, disbursements for entrepreneurial modernization maintained a good dynamism.

Between January and December 2011, these reached COP 1.28 trillion, (44% greater than in 2010)

representing 30% of the total disbursements of the Bank during a complex year for this type of

financing.

In this sense, both the aProgresar program as well as the new line for modernization drove

financing of investment plans to improve entrepreneurial productivity and competitiveness. As

from its beginning, aProgresar has disbursed resources for more than COP 3.7 trillion. In 2011,

aProgresar disbursements reached the sum of COP 329 billion and the Entrepreneurial

Modernization line reached COP 645 billion.

5 | Expand and strengthen the financial resources distribution

network

In 2011, Bancoldex included 8 new entities oriented towards micro-entrepreneurial credit as

financial intermediaries with credit line allocation. The network formed by financial entities allies

of Bancoldex allowed the bank to count with coverage in 29 departments in the country

throughout the year.

In addition, Bancoldex offered training and updating both for existing intermediaries as well as for

those recently engaged, all of which concentrated in the promotion of the utilization of credit lines

23

to attend working capital and modernization. Updating and promotion campaigns were

developed covering the offices of the most affected regions, supplementing campaigns to

generate business with enterprises. Likewise, a help tool called “Bancoldex Virtual Advisor” was

updated directly at the intermediaries’ intranets with the purpose of facilitating the executives of

financial entities the selection of the best option of Bancoldex credit line to be utilized.

6 | Technological Innovation: Electronic Rediscount

The use of Electronic Banking was consolidated by financial entities under the surveillance of the

Financial Superintendence, with which they substantially improved the response times to

entrepreneurs regarding disbursements. Periodical follow-ups and surveys of satisfaction were

carried out with the users of the system which showed acceptance levels over 90%.

In 2011 the process of implementation of entities not subject to surveillance of the Financial

Superintendence was initiated, attaining the migration of 20% of said entities. This process is

expected to be completed in 2012.

719 TOWNSSERVED

30PRESENCEIN DEPARTMENTS


24

7 | Support the purchase of Colombian products and services

Bancoldex, through continuous work with its correspondents abroad, concentrated in promoting

the purchase of Colombian products and services, mainly in those countries where this trade is

important and where customer diversification opportunities are found. In this sense, Bancoldex

promoted the utilization of instruments such as purchaser credit, supplier post-shipping,

documents discount, Liquidex dollars and international banking operation services. The foregoing

contributed to and promoted Colombian foreign trade.

In this sense, during 2011 disbursements of USD 156.6 million were reached in the item of

financing abroad and International banking operation (IOB) business were attended for USD 76.3

million.

In addition, during 2011 a new international invoice discount product was designed to provide

liquidity and negotiation tools in sales to Colombian Exporters. During the second semester of the

year, visits were made, proposing and adjusting the scheme for the new product with banks

abroad, eligible for Bancoldex. These entities shall provide a guarantee for the importer of

Colombian products and services, so that Bancoldex may purchase the international receivable

portfolio of Exporters. During the following months an operational pilot project will be

implemented seeking its full application during 2012.

17CORRESPONDANTBANKS IN COUNTRIES

25

8 | To impulse entrepreneurial strengthening through offering

“aProgresar – Entrepreneurial Management” programs to form

entrepreneurs”

The Bank strengthened the formation, training and updating management program “aProgresar

Entrepreneurial Management”, through which it developed essential activities, virtual training

publications and entrepreneurial accompaniment.

During 2011, this program focused on MSMEs, developing activities with contents directed

towards specific conditions of the entrepreneurial segments. Within the framework of this

program, several courses were carried out such as “aProgresar with my enterprise" directed

towards micro-entrepreneurs, “Management Development for Micro and Small Enterprises”. In

2011 sectorial formation courses were developed and it was initiated with companies engaged

with the tourism sector. These courses include on site and practical training, continued education,

and developed the management topics that contribute to improve entrepreneurial management.

Strategic topics such as financial and environmental management, entrepreneurial social

responsibility, and good practices of corporate government, human resources management,

exchange coverage and international negotiation were developed through practical workshops.

With the support of the Inter-American Investment Corporation (ICC) with courses on

international cooperation, courses were developed in Corporate Government in family enterprises

in the cities of Medellin and Cali.

TRAININGPROGRAM ( )ACTIVITIES IN

59 CITIES

8.270 TRA INEDENTREPRENEURS


26

At the end of 2011, the Bank made available the information sheet and the multimedia course

“Finances, the key for entrepreneurial success” fir entrepreneurs, including the main elements that

an entrepreneur should take into account for the financial management of its company or

business. The entrepreneurs also had access to multimedia courses such as "Management Advisor

in International Negotiation" and “Management Aspects for Credit Access” and to support

publications at the web site.

In addition, a videoconference scheme was implemented as a new tool to develop management

topics and to obtaining increased coverage.

In conclusion, during 2011 on site activities were carried out in 59 cities and municipalities of the

country, with the participation of 8,444 entrepreneurs. The program has contributed to strengthen

the academic relationship of the entrepreneurial real sector, private actors and workers guilds,

associations and chambers of commerce and the public sector, with the sole purpose of

strengthening the managerial skills of the country’s entrepreneurs of the country.

9 | Support for entrepreneurial capitalization

Financial Support

During 2011 the private equity fund investment program - Bancoldex Capital continued. Three

evaluations of equity funds were completed and four additional evaluations were initiated. The

Investments Committee recently approved an investment commitment for COP 9,600 million in a 20

new fund that will invest in the tourism sector in Colombia . With the current investments of 21Bancoldex , the Bank has channeled resources through equity funds for COP 128,018 million in 12

Colombian companies in several sectors. The foregoing means that for each peso contributed by

Bancoldex to capital funds, the resources available duplicate for capitalization of Colombian

enterprises.

Non financial support for the capital funds industry

By the end of 2011 a Non Refundable Technical Cooperation agreement was entered into with the

Inter-American Development Bank. The purpose of the agreement is to develop a program for

Consolidating the Entrepreneur Equity Sector in Colombia, which includes the following

20 | This commitment will be effective once the fund manager completes the minimum capital to begin operating the fund.

21 | Investment commitments for COP 66,41 billion in four capital funds. This does not include Bancoldex investment commitment in the new fund

that will invest in the tourism sector.

27

components: (i) strengthening of the capacity of local funds managers; (ii) strengthening of the

capacity of local institutional investors; (iii) facilitating contacts between dynamic SMEs and the

entrepreneurial equity sector; and (iv) promoting entrepreneurial equity investment /private

equity of Colombia. The program’s duration is 4 years with a total amount of USD1,455,000 of

which Bancoldex is committed to contribute with USD455,025 during the project development.

10 | Environmental Management

Financial institutions for development such as Bancoldex have stated to identify the role they may

perform with respect to the environmental agenda of their countries as well as the synergies that

may be established with multilateral banking, government entities and local actors. The foregoing,

with the purpose of defining the intervention mechanism to solve faults in the market from the

view point of financial intermediaries and the entrepreneurial sector.

The experience in the environmental issue of multilateral banking has allowed Bancoldex to take

advantage of the synergies through alliances, which was reflected in the development of two

technical cooperation projects agreed with the Inter American Development Bank –IDB-, which

seek to generate and develop the capacity inside the Bank and to establish the intervention

mechanisms.

The first technical cooperation completed the design of environmental and social management

system for Bancoldex and in September 2011 initiated a pilot for its implementation within the

Bank operations. The system is expected to be operational during the first semester of 2012. The

FINANCIAL

SUPPORT

INVESTMENT IN PRIVATE EQUITIES

AND ENTREPRENEUR CAPITAL FUNDS.

BANCOLDEX DOESN´T INVEST

IN ENTERPRISES DIRECTLY.

NON

FINANCIAL SUPPORTBANCOLDEX WILL CONTRIBUTE TO THE CONSTRUCTION

OF THE PRIVATE EQUITIES INDUSTRY ECOSYSTEM. THIS,

WITH THE PURPOSE OF INTRODUCING THE BEST

PRACTICES OF THE INDUSTRY, THROUGH

ACTIVITIES WITH INVESTORS, MANAGERS,

ENTERPRISES AND OTHER ELEMENTS

IN THE INDUSTRY.


28

environmental management system has the objective of developing an efficient cash flow risk

management, management of guarantees and reputation, including the environmental variable

within the credit operations analysis.

11 | Financial Management

Year 2011 was characterized by an important dynamism of disbursements, especially those of

medium and long term, both in pesos as in dollars.

This juncture obliged Bancoldex to increase its financing in pesos and in dollars. Thus, the Bank was

very dynamic in funding through Fixed Term Deposit Certificates (TDC) and Bonds indexed to the

DTF (quarterly funding reference rate) and to the IBR (banking reference indicator). Regarding

financing in dollars, the Bank utilized multilateral banking sources such as the IBD and CAF, and

their correspondent lines.

On the other hand, the portfolio growth implied a significant provision to continue with the same

standards of the Bank of portfolio protection, which had an impact on the financial results.

12 | Technological Modernization Project –Orion

During 2011, the Bank continued with the development of the Technological Modernization

Project – ORION- with which it projects to provide the institution with cutting-edge technology to

allow efficiency improvement to attend the fundamental elements of the business, such as the

customers, information management, change in processes, cost reduction, within a modern

standardized architecture to facilitate development at all levels.

The development stage of Phase II was carried out throughout the year, corresponding to treasury

and management modules, as well as initiating Phase II acceptance tests by the bank relating to

the portfolio products, which allowed initiating the migration process of these products towards

the new platform beginning with the month of December with credits and financial obligations in

charge of the Bank.

The remaining portfolio products, as well as Phase III of treasury are projected to migrate during

2012.

13 | International Relationships and Cooperation

The transformation process assumed by Bancoldex has evidenced the relevance of international

cooperation as an important tool for the Bank’s development as for its sustainability as a

Development Bank.

29

The International Relationships and Cooperation Office was created in 2011 as a new transversal

support for the bank for the management of international cooperation resources. The objective of

this front is to contribute to Bancoldex relationships as an agent in the International System for an

efficacious development of the Bank, of its programs and projects.

The increasing transcendence of the role of banks within international dynamics and the

development agenda allows Bancoldex, with its new challenges, to position itself as an

international interesting entity to receive cooperation. This reality also raises great challenges of

strategic positioning and of Refining priorities for acting within the cooperation framework.

The specific objectives are focused on coordinating the funding and the supply of international

cooperation resources, as well as increasing the insertion and relevance of Bancoldex as a

Development Bank within the international context.

Simultaneously to the process of creation of the office, several internal training activities have been

developed, seeking the awareness of the International Cooperation National System entities,

which are currently aware and know in detail the role of Bancoldex and the Bank’s needs in terms of

cooperation. Additionally, the relationship has deepened with cooperation sources which are

already working with Bancoldex procuring a comprehensive vision of the Bank allowing an 22

integral utilization of opportunities and have opened new relationships with cooperation actors .

As from September 2011, Bancoldex is a member of the new IDFC (International Development

Finance Club), conformed by 18 national and sub regional development financial institutions.

14 | Management of human talent and welfare

The human talent management style prevailing in the Bank is focused on the officer as an integral

human being. Thus, it has defined a Capacities Management System that allows the development

of the knowledge and skills of the officers, in accordance with their positions. This system counts

with organizational, functional and position capacities.

Additionally, it covers the personnel needs, attaining a balance between personal and labor life.

Development of human talent is not only an effort of capacities, it also takes into account factors

such as management, retention, and transfer of knowledge, values, attitudes, skills, potentials,

health, growth, cultural transformation, family environment and social responsibility.


22 | From 25 international cooperation entities registered in Colombia by Acción Social, which may be potential partners of Bancoldex, 18 have

been approached.

30

RISK RATINGS

During 2011, the Bank maintained the local long term AAA ratings, granted by Fitch of Colombia

S.A and BRC Investor Services. Regarding the rating in foreign currency the Bank obtained the

Investment Grade by the international rating agency Standard & Poor’s. The foregoing was based

on the increase of the sovereign rating of the Republic of Colombia that allowed an improvement

in the sovereign risk rating changing from BB+ to BBB- with a Stable perspective.

FULFILLMENT OF THE SISMEG GOALS FOR 2011(PERIOD FROM AUGUST 2010- JULY 2014)

Within the National Development Plan, Bancoldex participates in the objective of “Sustainable

Growth and Competitiveness”, with 5 goals:

A. Bancoldex financing for MSMEs modernization. Bancoldex financing goal for 2011 was COP 960

billion.

Resources were disbursed during the year for COP 805 billion, with which the goals was met in

84%.

23 | Colombian Government Goals System. Allows the Government and citizens to monitor in detail the social and economic policies, within the

framework of the National Development Plan.

DEBT INSTRUMENTS

LATEST RATINGS

LONG-TERM LIABILITIES(FOREIGN CURRENCY)

SHORT-TERM LIABILITIES(COP)

LONG-TERM LIABILITIES(COP)

DEC / 2011 JUL / 2011 AUG / 2011

BBB-Stable

F1+

AAA

BRC1+

AAA

31

B. Seasonal rains emergency financing. For the period 2011, the goal for financing enterprises

affected by seasonal rains was COP 50 billion. As of the closing of December 2011, Bancoldex

had delivered COP 48.762 billion to this segment reaching a fulfillment of 98% of the goal for

the period.

C. Disbursement for formalizing MSMEs standard rediscount conditions.

For 2011, the goal was COP 25 billion. As of December closing a disbursement level of COP

18,616 billion was reached for a fulfillment of 74% of the goal. Nevertheless, the report of

formalized enterprises is still pending by Confecamaras and other allies for the last quarter of

2011, information with which this goal established is expected to be exceeded.

D. Disbursements to finance projects for the improvement of entrepreneurial environmental

impact. In 2011 the first lines of the green portfolio of the Bank were launched and a goal for the

year was defined for disbursements of COP 30 billon. As of the closing of December,

disbursements were reached for COP 22,168 billion, which allowed a fulfillment of 74% of the

goal established.

E. Likewise, in accordance with the Ministry of Commerce, Industry and Tourism, for 2011,m

financing goals had been defined under preferential conditions for enterprises affected by the

seasonal rains (COP 200 billion) and for MSMEs under formalization processes (COP 50 billon),

base don the possibility of obtaining resources to support such entity. The non feasibility of

obtaining these resources due to budgetary restrictions of the Ministry and the national

Government postponed these girls for 2012 and following years.

Credits Portfolio

The disbursements performed during the year exceeded the goals budgeted in 210%. This result

was a consequence mainly of the high demand of resources in dollars as an alternative, given the

internal and external conditions. On its part the local market registered liquidity with the purpose

of preventing an overheating of the economy, with an impact in key variables such as the inflation

target. For such purpose the Central Bank increased the intervention rate throughout the year in

175 basic points.

Additionally, the strong demand of Bancoldex resources was attended with special lines both in

dollars as in pesos such as the Counter-cyclic Liquidity Line, Colombia Exports, Entrepreneurial

Internationalization Line, Productive Colombia, Financial Intermediaries Liquidex Line,

Sustainable Development and Lines for the Seasonal Rains Emergency, whose disbursements

FINANCIAL RESULTS


32

reached the sum of COP 719 billion. (Includes pesos and dollars)

Balance Sheet Accounts

Assets

A good dynamism of disbursements in dollars was present in 2011 (USD 1.16 million), of which

25% was destined for medoium and long term credits. Total disbursements in dollars explain a

greater balance in USD 174 million compared to the previous year. On the other hand, the

investments portfolio did not show major variations in amount cut the composition changed. As

from the first semester of 2011, the Board of Directors approved the construction of a strategic

portfolio to contribute to profitability and financial sustainability of the Bank, while in 2010 a

portfolio had been structured as a liquidity strategy. As a result of all the foregoing, the Bank’s

assets reached COP 5.95 trillion, an amount greater in COP 406 billion compared to the previous

year.

Liabilities

2011 was characterized by favorable liquidity conditions offered by the market in local and foreign

curency, which allowed to fund the credit lines growth both in pesos as in dollars. The greatest

needs of resources to cover maturities of liabilities and to meet the portfolio disbursements were

reflected in the collection of funds mainly in TDCs. On the other hand, the needs of resources in

dollars were reflected in the growth of utilization of allocations with corresondents and

multilaterals. As a result of the foregoing, the liabilities reached COP 4.6 trillion, in excess of COP

440 billion compared to the previous year.

PORTFOLIO DISBURSEMENTS

1,0

00,0

00 M

ILLI

ON

CO

P

2,0

00,0

00 M

ILLI

ON

CO

P

3,0

00,0

00 M

ILLI

ON

CO

P

4,0

00,0

00 M

ILLI

ON

CO

P

5,0

00,0

00 M

ILLI

ON

CO

P

2010

2011

33

Equity

As of December 2011, the equity showed a decrease of COP 34 billion with respect to December

2011. The foregoing was due mainly to a decrease of the profits during the period (COP 83 billion),

effect that was compensated by an increase in reserves for COP 44 billion, in which the legal

reserve for capitalization of trhe MSMEs is included. Lastly, a greater surplus was present for COP 5

billion, product of the appraisement of available investments for the sale of strategic portfolio.

Statement of Results

Financial margin

The gross financial margin compared to that of the previous year showed a reduction of COP 10

billion. The foregoing as a result of lower income deriving from the credit portfolio in pesos for

COP 43 billones (allocations at special rates and a lower average balance). It is worth highlighting

the management of treasury for obtaining resources, the expense due to funding with bonds

decreased in COP 32 billion, while greater collections in TDCs meant an increase in expenses of

COP 5 billion.

Profit

The accumulated profit in 2011 reached COP 15 billion, which was lower than that of the same

period of the previousn year in COP 83 billion. The foregoing is explained by a greater portfolio

provision (COP 33 billion), an increase in taxes due to the advanced payment of the accrual of

equity tax and the over rate of 2012 (COP 31 billion), and for a greater income tax COP 11 billion,

for the transition of presumptive income to oridnary income and the exhaustion of the fiscal

credits in the Bank.

Utilidad acumulada

UTILIDAD ACUMULADA

30.0

00 (

MM

CO

P)

60.0

00 (

MM

CO

P)

90.0

00 (

MM

CO

P)

120.0

00 (

MM

CO

P)

2010

2011

98,821

15,289


34

RISK MANAGEMENT

In 2011, Bancoldex continued with its consolidation process and strengthening of integral risk

management. The major efforts focused on strengthening the management systems of market,

liquidity, information security and business continuity risks.

Operational Risk Management System (ORMS)

Among the actions developed, it is worth highlighting the construction and adjustment of

operational processes risks maps, deriving from the modification of the chain value, the change in

the technological platform developed by the Bank and the application of a new methodology of

assessment of operational risk. Likewise, training journeys for officers were developed with the

purpose of deepening the culture of operational risk. On the other hand, tests were carried out to

the continuity plan of the business, with satisfactory results.

Market Risk Management System (MRMS)

During 2011, the Bank carried out a revision and updating of market risk policies and modified

some of the limits for treasury operations, in accordance with market conditions and business

strategy. In addition, work was carried out among different areas to operate forwards of COP/USD

with the Chamber of Central Counterparty Risk. On its part, the criteria to be contemplated in the

negotiation of “Credit Support Annex” were defined and approved, requirement of the ISDA

agreements entered into with counterparties abroad with which Bancoldex negotiates or Experts

to negotiate derivatives.

Credit Risk Management System (CRMS)

During 2011, the SARC accompanied the development of the strategic plan in an environment

characterized by the international financial crisis, through the strengthening of the processes of

granting credits and follow-up of debtors and counterparties.

Liquidity Risk Management System (LRMS)

During 2011, the liquidity risk management was oriented towards improving the measurement of

such risk, which is evident in the development and implementation of a new indicator in the

internal model. Such measurement model, approved by the Bank’s Board of Directors is an

adaptation of the standard methodology of the Financial Superintendence of Colombia and the

major modification was to include projections and adjustments of the different flows. Likewise, as

part of the continuous improvement process, a modification of the liquidity contingency plan was

35

approved, whose main changes include the redefinition of criteria to activate the liquidity

contingency plan, the adjustment of strategies to mitigate liquidity risk and a greater

disaggregation of the responsibility levels, including the creation of the Liquidity Crisis Group.

Information Security and Business Continuity (ISBC)

The Information Security Management System was consolidated in 2011, as part of the risk

management process within the new chain value in the Bank. A methodology was drafted for the

construction of the technology risk map and important progress was achieved in the matters

relating to strengthening of the SGSI and information classification.

Attributes were assigned to users of the Orion Project in accordance with their roles and

responsibilities identified in the new processes; technological recovery strategies were developed

for the continuity plan and the modules in production were prepared for their administration by

the Information Technology Department.

Regarding the requirements of the External Circular Letter 052 of 2007 of the Financial

Superintendence, the Bank continued to work focused on the development of the Orion Project.

Money Laundering and Terrorism Financing Risk Management System (AML/CTF)

During 2011, the Bank continued to improve the SARLAFT to mitigate the AL/FT risks of the

operations carried out. The methodologies to determine homogenous groups of direct clients

were revised and adjusted, as well as the assessment of risk factors, mainly those of clients and

international jurisdiction. During the monitoring of AL/FT risk maps different processes were

migrated and adjusted to the chain value of the Bank. A follow-up of the risk profile for each risk

factor was carried out, along with associated and consolidated risks, both inherent and residual,

maintaining the latter under the level approved by the Board of Directors. Improvements were

implemented in the application of prior control of AL/FT, which has maximized the administration

of the data base and the permanent monitoring not only of clients, but also their related parties.

Synergies were developed with other processes of the Bank, which allowed the centralization of

information which is important for the AML/FT, as well as the documentation and information of

customers. The Compliance Units was consolidated concentrating some of the responsibilities that

relied on other areas, which has allowed optimizing the procedures.

The culture socialization efforts continued for preventing and controlling the AL/FT in all

operations of the Bank through training sessions for the officers. Likewise, internal and external

reports were timely drafted, and the requirements of the AML/FT by the different component

authorities were met.


36

24MECI – Quality Management System

The Bank has complied with what was established in Decree 2913 of July 31, 2007, and has

implemented the Internal Control Standard Model and the Quality Management System (in those

entities obliged by Law 872 of 2003) and currently it counts with an Internal Control Standard

Model and a Quality Management System duly harmonized. The system is under permanent

follow-up and revision, complying with what has been set forth on Circular Letter 06 of June 27, 252005 of the DAFP and Decree No. 4110 of December 9, 2004 of the Presidency of the Republic.

During the month of January 2011 the DAFP Survey was answered within the terms foreseen for

such purpose, obtaining the following rating: progress of the MECI 96.59% and Quality progress

98.24%. Such ratings place the Bank’s management at the highest level of the rating matrix.

In May 2011, the rating entity Bureau Veritas Ltda. carried out a follow-up visit to determine the re-

certification corresponding to the new version NTC GP 1000:2009 and ISO 9001:2008. In June

2011, the rating entity granted the re-certification without observations about non-conformities,

finding a continuous and satisfactory operation of the Quality Management System within the

organization. This certification is valid until August 2014.

Complying with the purpose of the Quality Management System, Bancoldex has reached high

standards in its work with regards to customer’s needs satisfaction (entrepreneurs). The system

counts with a systemic approach in which all officers of Bancoldex should work towards improving

the processes, aiming at compliance of the quality policy in the every day activities and to reach

the objectives of quality, defined for this system.

The Quality Management System and the harmonization with the MECI have been the basis to

consolidate a management model and a structure based on processes, thus attaining a better

response to the satisfaction of the customers needs. Likewise, a permanent progress has been

attained regarding efficiency, efficaciousness and organizational effectiveness. The foregoing,

allows an integral understanding of its operations and represents a structure supported in those

differentiating pillars that provide the identity of the purpose of the business.

24 | MECI- Internal Control Standard Model.

25 | DAFP- DAFP- Administrative Department of the Public Function.

37

INTERNAL CONTROL SYSTEM

The Political Constitution of 1991 incorporated Internal Control as an instrument oriented to

guarantee the achievements of each Sate entity and compliance of the public function. On its part,

Law 87 of 1993 established the regulations to exercise Internal Control in State entities and bodies

and Law 489 of 1998 provided the creation of the Internal Control National System. With the

purpose of seeking more efficaciousness and impact of Internal Control in Sate entities, the

Administrative Department of the Public Function promoted the adoption and implementation of

an internal control model, initiative embraced by the Internal Control Advisor of the National

Government, which led to the issue of Decree 2599 of 2005 “through which the Standard Internal

Control Model MECI 1000:2005was adopted”.

Such conceptual framework proposed a Standard Internal Control Model for the public sector, in

such a manner to establish a basic control structure, observing the characteristics inherent to each

entity. The main purpose of MECI is to orient the entities towards compliance of the objectives and

that the same contribute to the essential ends of the State.

The current degree of maturity of the Internal Control Model of the Bank, along with the Quality

Management System have allowed the organization to focus on a continuous improvement of the

elements comprising these systems, in a consistent manner with other management systems

applicable to the Bank, showing favorable results in the progress and functioning evaluations

practiced by different external and internal control entities, and with the Risk Management

Systems enshrined in the regulations of the Financial Superintendence and with the Internal

Control System regulated by such entity under Circular Letters 014 and 038 of 2009.

The main management body of the Internal Control System is the Audit Committee, which

permanently monitors the adequate functioning of Bancoldex Internal Control System,

performing its functions in accordance with its Internal Regulations and with has been established

regarding internal control both for State entities in general and specifically for Financial Entities. In

compliance with its responsibilities, it has operated as support and permanent communication

channel with the Board of Directors for decision making regarding the Internal Control System and

its continuous improvement. Likewise, it has monitored the activity and performance of the

Internal Audit function exercised by the Comptrollers Office, which in 2011, carried out an

evaluation of the Internal Control System pursuant to the Annual Audit Plan approved by the Audit

Committee and to the Audit Regulations. During the assurance work it applied the objectiveness

and independence required, without any limitations for an adequate performance of the audit

work. The approach of the audit, the definition of the scope, the selection and application of the


38

tests was carried out based on the regulations for the professional practice of Internal Audit. Both

the Comptroller’s Office as the Statutory Auditor were able to carry out their evaluations with

independence.

With regards to the external evaluations of the ICS, in accordance with the last Government Audit

report with an integral approach, by the General Comptroller’s Office of the Republic available, (in

force 2010) “Bancoldex Internal Control System (ICS) obtained the score “Adequate” in the

conceptual evaluation, and its development is reliable, pursuant to the parameters established

under applicable regulations, general controls exist and are applied. Operationally, it obtained the

score “Efficient” and the specific controls of the lines, areas or processes examined mitigate the

risks fore which they were established.

According to the same report, Bancoldex, for registering its accounting operations, as well as for

the drafting and submittal of its Accounting Statements complies with the regulations established

by the Financial Superintendence of Colombia. In those aspects not included therein, the Bank

applies the standards and regulations contemplated provided by Decree 2649 of 1993. The

Accounting Internal Control System of Bancoldex obtained the score of Efficient. In accordance

with the evaluation carried out and the analysis of information provided by the Entity, the

conclusion is that the Bank counts with policies, processes and procedures clearly established for

the registration, control and generation of accounting information, which provide reliability of the

organization over the figures and information disclosed in the Bank’s financial statements.”

As of the closing of 2011, the Management, the internal or external control bodies of the Bank and

the Audit Committee did not detect any material or significant weakness that could represent risk

for the effectiveness of the Internal Control System. There was no knowledge about any frauds,

willful errors or manipulations of the financial information submitted and revealed by the Bank.

The results of the evaluations by the internal and external control bodies are informed to the Audit

Committee and the management carried out the plans pertinent for continuous improvement to

attend or overcome those aspects that required correction.

Regarding affiliates, on one part, Leasing Bancoldex, pursuant to the reports coordinated by the

Internal Control office, utilizes the reference of the MECI Model, using for such purpose the survey

“Self-Assessment2 of the Internal Control System in accordance with the methodology established

by the DAFP for its evaluation, concluding that the “degree of perception, understanding and

knowledge of all officers of the Internal Control System and the Organizational Culture of Self-

Control are ADEQUATE”. Additionally, “it was established that during 2011 the regulations

governing the operation of the Company were observed as well as the policies and directions

defined by the Management and the Board of Directors. Notwithstanding, items subject to

39

improvement were identified as not critical, and they do not jeopardize compliance of the

objectives of the Company; the deviations found are not material and do not have an economic

impact on the financial statements.”

On the other hand, Fiducodex, “in compliance of External Circular Letter 038 of 2009 of the

Financial Superintendence of Colombia and based on the special areas of the Internal Control

System (…) maintains good performance of the Control System elements, as follows:

A good control environment established by a Code of Conduct (…).

All the Risk Management Systems have been established, (…) with an adequate organizational

structure that allows the Trustee to preserve efficaciousness, efficiency and effectiveness of its

management and operational capacity, as well as to safeguard the resources it manages.

The Quality Management System (…) allows compliance of the instructions and directions”.

At the closing of the economic period 2011, Bancoldex maintains its legal regime as a mixed

economy corporation of the national order, ascribed to the Ministry of Commerce, Industry and

Tourism, and organized as a credit-banking establishment not subject to the regime for State

industrial and commercial enterprises, independently from the state interest in its capital. Due to

this characterization, notwithstanding its nature as a public entity, Bancoldex maintains a legal

regime of Private Law with respect to its acts and contracts, pursuant to the legal provisions and

regulations that govern the matter, which enables its competitiveness with regards to financial

support activities for entrepreneurs.

The Congress of the Republic issued Law 1450 of 2011, National Development Plan 2010 - 2014,

creating the Innovation and Modernization Fund for Micro, Small and Medium Enterprises

(MSMEs), as a system with separate management of accounts administered by Bancoldex, that for

all effects it resembles an autonomous equity. This aspect was regulated by the National

Government through Decree 3321 of 2011.

Likewise, Law 1450 of 2011 established that the National Government, subject to instructions

about distribution to the Nation by the CONPES, may allocate resources from the Bank’s profits for

the design, assembly and implementation of a Development Unit and for structuring and

implementing projects and programs identified by such Unit. Similarly, the cited Law 1450

assigned Bancoldex as the administrator of the Productive Transformation Program as a separate

management system of accounts, similar in all its effects to an autonomous equity.

à

à

à

BANCOLDEX´S LEGAL SITUATION


40

The issue of Law 1448 of 2011 is also highlighted, through which the measures for the attention,

assistance and repair of the victims of the internal armed conflict, which order Bancoldex to create

rediscount lines with preferential conditions directed to finance credits granted by credit

establishments to such victims, for financing activities tending to the recovery of their productive

capacity.

As a tool to strengthen the mechanisms of prevention, investigation and sanctioning of corruption

acts and effectiveness of public management control, the Congress of the Republic issued Law

1474 of 2011, through which administrative and criminal measures were established among

others, for the fight against public or private corruption, including new responsibilities for

statutory auditors, new obligations for those responsible of internal control and institutional and

pedagogical policies so that the entities of the national order carry out an Anti-Corruption Plan

and Attention for the Citizens.

In addition, as of the date of the report, Bancoldex along with Fiducoldex, the Central Bank (Banco

de la Republica) and the Ministry of Foreign Affairs have been involved in five ordinary labor

proceedings carried out by Attachés, Staff Members and Directors of commercial offices of

Colombia abroad, who had rendered their services between 1967 and 1992. The cited proceedings

claim the acknowledgement of pension contributions.

As of 2001, Bancoldex operates under a Code of Good Governorship, containing the policies and

procedures of Corporate Government oriented towards the protection of its shareholders and the

general public.

In 2011 several meetings of the Corporate Government Committee took place, in which the

analysis of results of the administration of the Board of Directors corresponding to the last

semester of 2010 and first semester of 2011, was carried out, among other activities. With regards

to this matter, the self-evaluation comprises the qualification of the individual participation of the

members, the performance of the Board as a joint body, and the performance and participation of

the Management in the meetings of the Board.

Regarding the individual participation of members, there was consensus with respect to the timely

attendance to the meetings, to the sufficiency of the time invested in the review of the information

provided by the Management and the high degree of knowledge regarding the Bank’s business.

With respect to the Board’s performance, the independence of the management, the adoption of

decisions based on knowledge and the efficiency for developing the meeting were highlighted.

CORPORATE GOVERNMENT

41

With respect to the performance of the Management during the meetings of the Board, it was

deemed that the information was provided in a comprehensive, sufficient and clear manner; the

questions were resolved satisfactorily by the Management and the issues are reviewed profoundly,

with the knowledge required until exhaustion.

Additionally, in 2011 the Bank entered into the Corporate Governance Development Framework”

with 25 international financing institutions, for establishing a common set of directions aimed at

supporting a sustainable economic development in emerging markets through Corporate

Government. The subscription of the Covenant aforementioned assumes a commitment of each of

the parties to integrate the Corporate Government in the investment operations, to identify and

assign an internal function for applying the guidelines, to provide training, and to draft an annual

report about the application of policies of each of the entities.

The Board of Directors met thirteen times in an ordinary manner, and the matters considered, as

well as the decisions adopted are attested to in the respective minutes drafted for such purpose,

which are kept under the custody of the Juridical Vice-Presidency – General Secretariat. Finally, a

training plan was developed for the members of the Board of Directors covering specific topics,

through their participation in a forum organized by the Colombian-American Chamber of

Commerce, denominated “Make your Board of Directors an Asset”, which took place on November

1, 2011, and in the training called “Analysis of the Anti-Corruption Regulation” carried out on

December 19, 2011.


INFORME DE LA JUNTA DIRECTIVA Y DEL PRESIDENTEA LA ASAMBLEA GENERAL DE ACCIONISTAS 2011

00

GESTIÓN Y LOGROS 2011

42

SURVEY COUNTRY CODE

ENTREPRENEURIAL SOCIAL RESPONSIBILITY

HIRING GOODS AND SERVICES IN BANCOLDEX

The Country Code Survey is defined as a tool applied by the Financial Superintendence of

Colombia for attaining an adequate corporate government that contributes to the fulfillment of

stability, safety and confidence objectives, promotion of the Colombian stock market and

protection of investors, savers and insured parties.

The Superintendence expressly highlighted the results of Bancoldex regarding this matter, with

compliance of 85.37% with respect to the measures adopted, in such a way that the Bank was 14th

among 152 entities evaluated, very close to Isagen (1st place), Bolsa de Valores de Colombia (3rd),

Bancolombia (6th), BBVA Colombia (9th) and Ecopetrol (13th), and even on top of entities such as

Davivienda, Protección, ISA, Argos, Codensa and Almacenes Éxito, among others.

During 2011, the Ministry of Commerce, Industry and Tourism hired a diagnosis with the Chilean

consulting firm Vincular to carry out an analysis about compliance of the expectations of the

International Standard ISO:26.000 of social responsibility, by all the entities belonging to such

sector. In this sense, Bancoldex was considered by the study as a leading entity in all components of

social responsibility covered by the regulation, such as corporate government, human rights, and

matters of consumers, fair operational practices, labor practices, active participation, community

development and environmental management.

Hiring of goods and services in Bancoldex is mainly oriented by the values of equity, economy,

objective selection and transparency. Through a prior definition of contracting objectives and its

rigorous application, the Bank guarantees the appropriate selection of its suppliers. In turn,

through the publication of the contracting terms in its web site, it allows the general community to

know its contracting activities, guaranteeing free access to all persons and companies interested in

participating of such invitations.

The hiring process is not limited to a simple acquisition of goods and services. For the Bank, within

its Entrepreneurial Social Responsibility philosophy, its suppliers constitute an important group of

interest, reason for which it will make its best effort to generate long term relationships base don

trust, equity and cooperation. With regards to this last aspect, the Bank has implemented an

Entrepreneurial Strengthening Program for Bancoldex Suppliers, divided in two general blocks.

43

First, the managers have the facility of accessing knowledge about the best and most recent

organizational and business practices. Second, with the cooperation of the University Externado

de Colombia and its Plan of Sponsors for Entrepreneurial Accompaniment, suppliers have the

opportunity of relying on an advisor group with the mission of drafting an organizational

diagnosis of their company, oriented towards providing advise in light of the best practices and

solutions relating to the areas of opportunity identified.

As of the date of this report, the Bank maintains its operations duly instrumented and complies

with the governing regulations.

The operations carried out by the Bank with its Partners and administrators are adjusted to the

general policies of the entity. Such operations are duly specified in note number 28 (transactions

with related parties) of the financial statements. The Bank did not carry out any transactions or

operations with partners or administrators whose characteristics differed from those carried with

third parties, neither did it supply gratuitous or compensated services, or loans without interests or

any consideration whatsoever, except for those having a labor character regulated by articles 152

and 153 of the Substantive Labor Code.

Bancoldex configures a control situation with the Fiduciaria Colombiana de Comercio Exterior S.A.,

FIDUCOLDEX, with an interest of 89.17%, an indirect mixed economy corporation by shares of the

national order, organized as from October 31, 1992, as well as with Leasing Bancoldex S.A., with a

share of 86.55%, a mixed economy corporation organized indirectly, not ascribed or related to any

Ministry, and subject to the regime governing industrial and commercial State enterprises.

Throughout 2011, the Bank performed directly with Fiducoldex some administrative operations

such as leasing and contracting of the global banking policy. In addition, dividends were received

from the Trust entity and this entity is in charge of administering the autonomous equity deriving

from the securitization of Bancoldex portfolio carried out at the end of 2010.

On the other hand, it carried out credit portfolio, treasury and administration operations with

Leasing Bancoldex, Financing Entity, relating to the Bank’s global banking insurance and leasing

policy.

In this order of ideas, Bancoldex maintains a macro agreement of shared services with Fiducoldex

TRANSACTIONS WITH RELATED PARTIES

SUBORDINATES


44

and with Leasing Bancoldex, with which it intends to take advantage of the synergies of the entities

that form part of the “Bancoldex Group”, provided that the same does not imply in any case a

delegation of professional standards.

Likewise, and pursuant to what is set forth under Article 44 of Law 1150 of 2011, the Ministry of

Commerce, Industry and Tourism through Fiducoldex, who acted as administrator of the trust of

the former Modernization Fund for Micro, Small and Medium Enterprises – Fomipyme – on

December delivered the documentation necessary to comply with the obligations and rights that

were assigned to the new Modernization and Innovation Fund for Micro, Small and Medium

Enterprises.

Finally, it is worthwhile highlighting that during 2011 the Board of Directors of Bancoldex,

approved the general policies for financial cluster risk management with respect to the Bank and

its affiliate and interested entities, regarding risks, corporate government, prevention of asset

laundering and financing of terrorism and internal control, which shall be implemented

throughout 2012.

It is important to point out that the independence in the businesses and decision making,

constitutes a premise of its relationship, which is limited by the benefit that may be obtained by the

client, from the products and services offered by each entity.

As of the closing of December 2011, Bancoldex maintained investments in the “Aseguradora de

Comercio Exterior” -SEGUREXPO - (49.57%), in the “Banco Latinoamericano de Exportaciones” -

BLADEX (1.34%) and in the National Fund of Guarantees (30.21%).

Bancoldex operates pursuant to Law, through policies defined with respect to the acquisition of

technology and the use of licensed software. Likewise, it counts with internal control procedures

that seek to ensure due compliance of said regulations.

In order to comply with the provisions set forth under articles 46 and 47 of Law 964 of 2005 – the

Colombian Foreign Trade Bank S.A. – Bancoldex, certifies that the financial statements and other

reports relevant for the public do not contain any vices, inaccuracies or errors which may hamper

OTHER CAPITAL INVESTMENTS

INTELLECTUAL PROPERTY AND COPYRIGHTS

PERFORMANCE OF THE DISCLOUSURE AND CONTROL SYSTEMS

45

the knowledge about the true equity situation or about the operations carried out. Additionally,

the disclosure and control systems used by the entity to include information contained in said

financial statements and reports relevant for the public are adequate, based on truthful

information, and subject to audits practiced by the Internal Control Office of the Bank and by the

Statutory Auditor, under the supervision of the Audit Committee.


OUTLOOK ANDMANAGEMENT 2012

47

Aware of the responsibility and the new challenges implied by the strengthening of Bancoldex as a

model of integral development bank, the strategic guidelines of the mission and vision of the Bank

were modified in order to include the new elements in force to establish the management

framework as from 2012. In accordance with the foregoing, the mission and vision were defined as

follows:

OUTLOOK AND MANAGEMENT 2012

Mission: As a development bank, we drive the Colombian entrepreneurial sector

productivity through innovation, modernization and internationalization, with

financial sustainability and commitment of our human capital, within the framework

of social responsibility.

Vision: In 2014, to become the leading Bank implementing entrepreneurial

development instruments to promote productivity of Colombian enterprises.

Pursuant to these strategic guidelines, the Banks hall continue its transformation towards a

“Integral Development Bank Model”, adding to its traditional credit activity the administration of

programs, access to financial services, functions of development agency and support in matters

relating to private capital and entrepreneurial capital funds. On the other hand, it shall focus in

offering activities supplementary to credit. All the foregoing supported on a cooperation scheme

that allows the Bank to count with non reimbursable external resources (national and

international) for developing its function.

The foregoing implies focusing on eight strategic action fronts established in the Plan:

Accessibility to banking, social inclusion and entrepreneurial formalization.

Productive transformation and entrepreneurial development

Economy internationalization

Environmental Management and social responsibility

à

à

à

à


48

à

à

à

à

Development, innovation and entrepreneurship

Cooperation

Guarantee the bank’s financial sustainability

Organizational effectiveness

On the other hand in 2012 Bancoldex shall continue committed with the initiatives established in

the Sectorial Strategic Plan led by the Ministry of Commerce, Industry and Tourism, within the

framework of the National Development Plan “Prosperity for all”.

In this context, Bancoldex will strengthen the management of the Development and Innovation

Unit in its 4 action lines. Additionally, the challenge for 2012 shall be to implement the programs

and instruments defined for each of these strategic areas, define the impact indicators adequate

for measuring the management of the programs and in a parallel manner, to assess the

functioning of the programs and management of the work developed by the Un it.

In this sense, the follow- up of the Bank’s strategic activities as well as the programs managed by

Bancoldex, it shall be extremely important to guarantee the adequate handling of resources, the

transparency and a good fund management.

Within the environmental management context, Bancoldex will implement the social and

environmental Management of the Bank. For such purpose as from 2011 the pilot project for the

assessment of the system scheme and the information forms was initiated, along with the four

main intermediary financial entities of our resources.

It is important to take into account the fact that the system not only seeks compliance of the laws

and regulations issued about the matter and regulated by the Ministry of Environment, but also to

provide a valid risk assessment scheme for the operations funded to the financial system by

Bancoldex. The ultimate end of the scheme is to attain that the financial system as a whole

implements its own assessment schemes during the coming years.

The extension of the Sustainable Development Line is planned for 2012, to deliver resources for

COP 40 billion pesos to specific investments of companies for monitoring, controlling and

mitigating the environmental and social impact of their activity.

With regards to the financial management, the outlook for 2012 is a fundamental challenge

constituted by the application of international accounting standards (IAS) and international

financial reporting standards (IFRS) in Colombia.

49

PERSPECTIVAS Y GESTIÓN 2012

Law 1314 of 2009 sets forth that for year 2014, the entities subject to the obligation of keep public

accounting shall be governed by international standards. Such is the case of banking and of

Bancoldex. Thus, all financial institutions have started to prepare themselves for this great change

regarding the way of submitting and analyzing the financial statements. The first phase is a stage

of knowledge about the regulations, the second constitutes an assessment stage of the main

changes and their impact in the entity and the third stage is the implementation of the

international standards.

Bancoldex, in coordination with its affiliates has started to work on this subject and during 2012 it

should exhaust the first two stages. Given the different businesses of Bancoldex and its affiliates,

the challenge of implementing international standards is big. It is a project that generates impact

over all the organization and implies a deep change in the technological applications utilized by

the bank to keep its financial information.

On the other hand, the bank continues with the challenge of expanding its funding sources both in

pesos and in foreign currency (especially dollars). An excellent dynamism of the credit

disbursements is expected for year 2012 and consequently assuring its funding becomes relevant.

Finally during 2012, Bancoldex shall continue to reinforce its good standing in the national and

international environment.

The Management is not aware of any important event that may have occurred between the date of

closing of the economic period 2011 and the date in which this report is submitted, that could

affect its scope or interpretation.

SUBSEQUENT EVENTS

SANTIAGO ROJAS ARROYO

PRESIDENT OF BANCOLDEX


WE ARE THEDEVELOPMENT BANKOF COLOMBIA

www.bancoldex.com

@bancoldex

OFFICES

Bogotá: Calle 28 No. 13A–15, pisos 38 a 42

Barranquilla: Cra. 52 No. 76–167, local 101,

centro comercial Atlantic Center

Cali: Calle 4 Norte No. 1N–04, edificio Torre

Mercurio, barrio Centenario

Medellín: Calle 7 Sur No. 42–70, oficina 613,

edificio Forum, sector de El Poblado

Bucaramanga: Cra. 31 No. 51–74, oficina 1207,

edificio Torre Mardel

Pereira: Cra. 13 No. 13–40, oficina 405, centro

comercial Uniplex Circunvalar

BANCÓLDEX ENTREPRENEURIAL CENTRE

Bogotá: Calle 28 No. 13A–63, edificio Centro de

Comercio Internacional

Barranquilla: Cra. 52 No. 76–167, local 101,

centro comercial Atlantic Center

Cali: Calle 4 Norte No. 1N–04, edificio Torre

Mercurio, barrio Centenario

BANCÓLDEX TOLL-FREE NUMBER

Bogotá: (+571) 742 0281

Other Cities: 01 8000 18 0710

Ministerio de Comercio,Industria y TurismoRepública de Colombia

report from the board of directors and the president of bancÓldex 2011

Documents

long term of bancoldex

bancoldex credits

credit disbursement

significant credit growth

good performance

growth of companies

generalshareholders

good dynamism